Madonna, who long ago reshaped the definition of a pop superstar, now appears intent on redefining the traditional model of a record label, according to people familiar with a possible 10-year, $120-million deal that is under negotiation.

Reports have been circulating since June that the 49-year-old icon might walk away from her longtime label, Warner Music, to sign a comprehensive deal with Live Nation Inc., the concert promoter. That deal would have Live Nation not only selling her recordings and mounting her lucrative tours but also handling her merchandising, corporate sponsorship deals and the licensing of her name and image.

The deal is not signed, but last week Madonna’s management told Warner that the singer would be bolting because the label had failed to match the offer made by Live Nation, according to someone close to the situation who asked for anonymity because he was not authorized to comment.

[...] Attorney Don Passman, who has represented artists such as Mariah Carey, R.E.M. and Tina Turner and written “Everything You Need to Know About the Music Business,” said the weakened labels had been pushing for deals with newer acts that give the labels access to income streams they haven’t traditionally dipped into, such as the act’s concert touring. Now, the labels are seeing a push back in the form of Live Nation’s overtures.

The major labels once had singular inroads to radio and bricks-and-mortar retail, but as those two sectors have narrowed, that advantage has become less vital.

It also comes as the major record companies are reeling from the loss of historically reliable brand-name acts. Word of Madonna’s likely exit from Warner Brothers, a unit of the publicly held Warner Music Group, came the same day that one of rock’s biggest free agent acts, the acclaimed British band Radiohead, started delivering digital copies of its new album directly to fans, in a big break with industry convention. Another influential free agent band, the Eagles, is selling its new album directly to Wal-Mart Stores.

The news isn’t all bad for the major labels. They recently won a $222,000 judgment against a single mother in Minnesota for sharing two dozen songs online through Kazaa. But an uncollectable judgment is cold comfort for an industry that’s losing support on both ends of its business.

Not only are customers finding other ways to fill their musical needs, so are the musicians.

[W]hen Radiohead quietly divulged plans to let fans name their price for the digital download of its new album, “In Rainbows,” it incited talk of a revolution in the music industry, which has found the digital marketplace to be far less of a cash cow than it once dreamed. Though Radiohead is in a position that can’t easily be replicated — it completed its long-term recording contract with the music giant EMI while retaining a big audience of obsessive fans — its move is being seen as a sign for aspiring 21st-century music stars.

“To put your record out for someone’s individual perceived value is brilliant,” said David Kahne, a longtime music producer who has collaborated with artists like Paul McCartney and Kelly Clarkson. While it presents obvious risks as a business model, he noted: “It’s a spiritual model. That’s what it feels like to me.”

The Radiohead camp has been reluctant to add to the hype surrounding the album, which has been stoked by breathless blog posts and e-mail exchanges for the past week. Bryce Edge, who manages the band with Chris Hufford of Courtyard Management, stressed that the band’s tip-jar-style tactic “is not a prescription for the industry.”

But he acknowledged that it has punctuated a debate about the fair value of music that has accelerated in the last few months. [...]

[...] Mr. Edge summed up the pricing pandemonium simply: “Digital technology has reintroduced the age of the troubadour. You are worth what people are prepared to give you in the digital age because they can get it for nothing.”

[...] “The final acid test,” Mr. Edge said, “is come January, when the music has been available. Will there still be sufficient demand for a CD for us to feel that we’ve proved that making music available does not necessarily cannibalize CD sales?”

[...] “The majority of the public are really decent human beings who are honest,” Mr. Hufford said.

THANKS to the Internet, universal access to the printed word and economic globalization, the 21st century is expected to be shaped by the free exchange of ideas. But casting a shadow over this optimistic prediction is the emerging threat of “libel tourism.”

In 2004, Khalid bin Mahfouz, a billionaire Saudi businessman, took action against Rachel Ehrenfeld, an American author whose book “Funding Evil: How Terrorism Is Financed and How to Stop It,” published in 2003, argues that Mr. bin Mahfouz has financed Osama bin Laden and other terrorists. Mr. bin Mahfouz sued Ms. Ehrenfeld for libel in Britain, where libel laws impose an onerous burden on authors to prove the truth of their statements, and in 2005 won a default judgment ordering her to apologize, destroy all copies of the book and pay the sheik roughly $230,000 in damages.

The book had never been published or sold in Britain, but about 20 people had ordered it online and had it shipped there. British courts asserted jurisdiction, and Ms. Ehrenfeld found herself subject to the laws of another country.

Until this case came along, American authors and publishers thought that unless their books were actually published in Britain, they would not be subject to its rather draconian libel laws, which put the burden of proof on the defendant rather than the plaintiff as American laws do, and greatly restrict what information writers can present as evidence in their defense. Now it appears that wealthy and powerful people who object to a book can simply find a country with sympathetic laws, have a book shipped there and sue.

[...] To protect authors in the future, Congress should pass legislation preventing any American court — state or federal — from enforcing libel judgments issued by foreign courts, so that anyone wishing to sue an American for libel must do so in the United States. This would be an exception to our usual practice with regard to British court judgments, which are usually enforced here. But because the differences in American and British libel laws are drastic, special protections are needed to uphold our tradition of free speech.